If you think Canadian bank stocks look expensive, you’re right. At least that’s true when compared to their U.S. peers, which trade at roughly 0.9x book value.

However, Canadian banks pay an average dividend yield of 4.1% versus just 1.8% for U.S. banks, noted Martin Roberge, a portfolio strategist at Canaccord Genuity.

“That being said, the right valuation comparison for banks should be against a market benchmark and on this count, true, Canadian banks are not cheap,” he said. “But they are not overly expensive as many believe.”

Canaccord’s composite valuation gauge, which includes relative forward price-to-earnings, trailing price-to-book and trailing price-to-dividend measures, does show that Canadian banks are trading above their historical average.

However, Mr. Roberge noted that they are still below the level of recent peaks for the banking sector, even when those three metrics are considered individually.

“Therefore, we believe there is more room for Canadian banks to assume market leadership in the first half of 2013,” the strategist said.